Rebel Cole surveyed the commercial real estate lending exposures of 157 U.S. banks with at least $10 billion in assets and concluded more than 60 of the largest banks in the country are at increased risk of failure due to their commercial real estate (CRE) exposures.
With commercial properties selling at serious discounts in the current market, banks eventually are going to be forced by regulators to write down those exposures.
At substantial fees, some banks have taken to buying credit insurance from investors who essentially take over some of the loan risk from the institutions, the Wall Street Journal reported this week.
Using public quarterly data from the Federal Financial Institutions Examination Council Central Data Repository, the FAU survey lays out each bank's total exposure level as a percentage of the institution's total equity.
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